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JSE could recover slightly on Tuesday

Global markets slumped on Monday due to the coronavirus outbreak and a conflict between Russian a Saudi Arabia over the oil price

10 March 2020 - 06:54 karl gernetzky

Picture: 123RF/SOLARSEVEN

The JSE may benefit from a recovery on Asian markets on Tuesday morning, after a huge sell-off on Monday, during which the JSE’s resources index fell 12%.

Markets were spooked by the prospect of Russia and Saudi Arabia flooding the market with cheap oil in a bid for market share, a move that comes as investors are still nervous about the economic implications of the coronavirus.

As markets have become more volatile, talk of co-ordinated fiscal and monetary support are getting louder, National Australia Bank analyst Rodrigo Catril said in a note.

On Monday, there was speculation that the White House is trying to put together an economic package that might include temporary expansion of paid sick leave, and a menu of policy options including tax relief and cash flow injections to help companies facing disruption, Catril said.

In morning trade on Tuesday, the rand had firmed 1.02% to R15.94/$, while most Asian bourses were recovering a little.

The Shanghai Composite was up 0.62% and Hong Kong’s Hang Seng 1.8%. Tencent, the Chinese media giant of which Naspers holds a sizeable stake, was up 2.17%.

Gold was down 0.81% to $1,666.65/oz while platinum added 1.21% to $876.33. Brent crude was 0.12% higher at $33.32 a barrel.

Focus on Tuesday is likely to remain on geopolitical developments around oil and coronavirus case numbers. CNBC reported that Italy is seeking to expand its quarantine to the entire country.

In corporate news, financial services group FirstRand is expected to release its results for the six months to end-December later in the day, but has not released a trading statement, implying its headline earnings per share (HEPS) have not moved in a range of 20% or more.

HEPS are a widely used financial metric in SA, stripping out one-off items and giving a better indication of the underlying performance of a business.